DAX Price Forecast: Boosted by Strong Performance in European Mining Stocks Ahead of US Inflation Data

Highlights

• Mining stocks lead gains, up 3.6%
• Autos and construction stocks also rose
• European investors tuned into US CPI Data

Overview

European stock markets opened the week on a positive note, with the pan-European Stoxx 600 index closing 0.6% higher and hitting a one-month high on Tuesday. Mining stocks led the gains, and most sectors and major bourses closed in the green.

Germany’s DAX and the UK’s FTSE 100 also closed higher, while France’s CAC 40 index closed up 0.9% and reached a record high. The week ahead is filled with economic data, including a closely-watched U.S. inflation report.

European Mining Stocks Surge by 3.6%

Mining stocks led the gains in European stock markets, with a 3.6% rise despite recent signs of weakness in the Chinese and US economies. Rio Tinto and Glencore both saw gains, with Glencore proposing a cash component to its bid for Teck Resources.

The mining sector logged its biggest one-day percentage gain in more than four months. A softer dollar helped drive gains in base and precious metals.

Autos and construction stocks also rose, while food and beverage stocks fell. Individual stocks like UBS also saw gains, with a 1.1% increase after JP Morgan raised its target price.

Industrial miners rose 4.1% and the energy sector advanced 0.7%, tracking firm commodity prices. However, a stronger pound weighed on shares of internationally-focused firms, including pharmaceutical firms and companies like Reckitt Benckiser Group and Unilever.

Glencore rose 3.3% after proposing a cash component to its bid for Teck Resources. Devolver Digital Inc slumped to a record low after missing annual core earnings expectations.

Meanwhile, retailers saw a boost in spending from Mother’s Day purchases in March

Investors Eye US Consumer Prices Report, Fed Meeting Minutes

Investors will be monitoring the US performance in the coming days, but overall, Europe can pick up the pace again.

Following the strong US jobs report last week, investors will be watching the consumer prices report on Wednesday as well as the Federal Reserve meeting minutes for more clues on interest rates.

In the euro zone, inflation data from Germany will also be watched closely after a less-than-forecasted drop in euro zone retail sales in February. Investor morale in the euro zone improved in April after a dip in March, however.

ECB policymaker Pablo Hernandez de Cos has left the door open for more interest rate hikes, stating that core inflation in the euro zone is likely to stay high for the rest of 2023.

The International Monetary Fund has trimmed its 2023 global growth outlook slightly, with a projected contraction in Germany’s economy in Q1. Additionally, the IMF now expects a smaller-than-expected contraction in Britain’s economy this year.